Blackstone has triumphed in the bidding war for Hipgnosis Songs Fund, as rival Concord Music has refused to raise its offer.
In a stock exchange announcement today, Concord said it would not be increasing its offer of $1.25 per Hipgnosis share, leaving Blackstone’s offer of $1.30 per share as the highest offer on the table.
The bidding war first broke out on 18 April, after Concord initially offered $1.4bn for the portfolio of the music rights trust.
Blackstone launched a series of counteroffers, before its fourth bid finally valued Hipgnosis at higher than what Concord had been pitching for on 20 April.
“This closes the chapter on a long period of turmoil for the fund, and the portfolio will now definitively revert to Blackstone, eliminating any remaining upside from a further round of bids,” said Shavar Halberstadt, analyst at Winterflood.
“In the end, the board has managed to elicit a helpful outcome for shareholders, with a share price total return of 45 per cent year-to-date, and procedural details will follow in the coming weeks.”
Numis analysts Ewan Lovett-Turner and Gavin Trodd said they suspected that Concord may have been constrained by its funding, “given its increased offer was accompanied with an additional debt facility and a commitment to sell 30 per cent of the portfolio over 18 to 24 months”.
“We do not expect any other competing offers, as we expect these would have come out of the woodwork already, and press speculation was that other offers were at lower levels,” they added.
Looming over the entire bidding war was Blackstone’s threat to fall back on their ability to buy out the entire portfolio of Hipgnosis, thanks to their ownership of the trust’s investment manager.
This call option was contentious, as it required the investment manager to not be let go with cause, and some analysts began worrying that a protracted legal battle may emerge if Blackstone pursued the option.
The relationship between the board of Hipgnosis and its investment manager has seriously deteriorated over the last year, culminating in an independent report that found the trust’s adviser had inflated growth figures and overstated the value of its portfolio, with the board fully accepting the report.
The independent valuer Shot Capital slammed HSM for falling “below industry standards”, adding that it had “failed to invest in systems and provide the services required to effectively manage a catalogue of 40,000+ songs”.
Now however, Blackstone will be able to buy Hipgnosis and put an end to a “problem child” investment, as the Numis analysts termed it.